Financial Advice on Car Purchace Pls.

d5xs

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Hi all currently looking for a CLK (W208) to buy. In a bit of a dilemna though. Heres the scenario:

Have some cash to be able to afford say a W208 230 kompressor 2000 facelift at say 17k top end price.

Thing is dont know if I want to tie all that cash in a depreciating asset. Especially when I think of what better use I could put the money into say buy a property for investment etc.

Options could be:

a) Put down say a 10-20% deposit and finance the rest
over say 3/4 years.

b) bank offering a 12k loan @ 7.9% over 4-5 years.
Then cover the rest with available cash.

All opinions welcome as NOT buying the car, is NOT an option.
Starting to see CLKs in my dreams.

Can I also mention how hard it is to find a car that meets the criteria I'm looking for. Nothing fancy just the dark Azzurite blue, light grey leather, facelift model, fmsh, auto, 230Kompressor with around 60k on the clock or less. Priced at 17k or under and in good condition. Pls lemme know if you stumble across one for $al£.

Thanks again all feedback appreciated.
 

RichardM

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I wouldn't have thought you'd get that high an interest rate on your savings so it will probably work out cheaper to buy the car cash rather than taking out a loan. It really depends if you want to use all your savings and whether you need it for something else (such as the second property you mentioned). Not that 17K would buy you much in the property market!
 

Aletank

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I'd say buy the car cash or if must borrow money stick it on ya mortgage and make sure you do actually pay regular lump sums off ;)
 

adam1

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I seems like I'm in the same dielema mate.

You can get a low interest loan of 6.2% from Northen Rock without penalty of early repayment. best on market.

You could invest the savings(minus deposit) in a high interest account some offer around 4.3%. The difference is around 2% from what you'll pay and what you have saved.

In makes more logic to invest in a property. 17K would be a deposit on a fixed rate low int mortage. However the market has cooled down and being a medium term investment you unlikely to make gains like 20% per year like recently. You would make more than in a savings account though. I would check the market out and maybe invest in the buy to let market. At least you mortage will be covered by the rent and the interest you pay can be offset against any earnings(rent) you take.

Now that is the sensible thing but one never follows that if one desires the CLK or Merc of any type. By putting a deposit on the car and paying interest the PCP comes to mind. These really and rip offs and keep away if you can get a low int loan which means the car is your from day one.



Its always better to buy used and CLK holds values well than other models.

If your investing in a property, experience shows that better yields are made on terraced/semi-detached properties than detached or flats. They have low setup costs and the rent/cost ratio is better.

Hope that helps.
 

adam1

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If you buy the car cash you would lose the interest you would earned if you place it in a high int account.

For eg a 15000 in the bank instead of ur car would earn you £2000 in 3 years at 4.3%
End of Y1 you have 15000x4.3%=15645
End of year 2 you have 16317
End of year 3 completed you have 17019.
You have made £2019 in 3 years if you left your money in the bank.

The loan will cost you 6.9%APR that is £1444 at the end of 3 years.

However the payments you make ie £456 over 36 months say for eg would have earned interest if you invested them into the high int account instead of servicing ur loan.

The net interest they would have brought you would have been around £1000.

So the total cost to you via a loan is £2400. But since the money was not used to buy the car and it earned you £2019 in the bank,
so the net cost to you would be around £400 for taking out the loan, and you have the money in the bank should you decide to buy something else. The real cost of borrowing is lower since that 15000 will be worth less after 3 years but ur still paying the same monthly premium.

15000 is used as an example with a typical APR of 6.9%.
 
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d5xs

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Thanks to everyone for taking time out to do the various computations and offer suggestions. Particularly like the ideas re spreading it against your mortgage payments, which a friend of mine has done, or looking for a cheap loan option.

Well booked an appointment to see the bank manager monday, to see if we can reach some sort of understanding. Alternative for him is he wakes up with a horse next to him come tueday morning.

Keep you all posted.
 

Aletank

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Particularly like the ideas re spreading it against your mortgage payments
My mortgage company - Nationwide - offered me a loan at the Nationwide mortgage standard rate 4.25% I think. Either to spread it over the length of my mortgage or like a separate loan say 3,4,5 years etc but still at that rate as its still secured on your property.
 

Dieselman

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Originally posted by adam1
If you buy the car cash you would lose the interest you would earned if you place it in a high int account.

For eg a 15000 in the bank instead of ur car would earn you £2000 in 3 years at 4.3%
End of Y1 you have 15000x4.3%=15645
End of year 2 you have 16317
End of year 3 completed you have 17019.
You have made £2019 in 3 years if you left your money in the bank.

The loan will cost you 6.9%APR that is £1444 at the end of 3 years.

However the payments you make ie £456 over 36 months say for eg would have earned interest if you invested them into the high int account instead of servicing ur loan.

The net interest they would have brought you would have been around £1000.

So the total cost to you via a loan is £2400. But since the money was not used to buy the car and it earned you £2019 in the bank,
so the net cost to you would be around £400 for taking out the loan, and you have the money in the bank should you decide to buy something else. The real cost of borrowing is lower since that 15000 will be worth less after 3 years but ur still paying the same monthly premium.

15000 is used as an example with a typical APR of 6.9%.

How do you earn enough to afford a Mercedes and have £15k in the bank on high interest and not pay tax.

You have forgotten that your interest is subject to tax and so will earn much less over the three years.

Also you will be hard pushed to get 4.3% interest at present.
 

silverclk230

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d5xs
had the same dilemma as you 3 months ago
went online to cahoot and took a flexible loan (@6.8% - variable - but its a cheaper rate if you apply now) As long as you pay a minimum level they are happy and you can pay off at anytime without penalty.
It would be cheaper if I linked it to my mortgage though, via a further advance - may do at some point in the future.
Point of this post is to say dont procrastinate - just do it!
Purchased a 99 clk 230 cab and its fantastic - should have done it years ago.
Trouble is now my boss hates me `cos I have a better car than him.
 

Koolvin

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Originally posted by silverclk230

Trouble is now my boss hates me `cos I have a better car than him.


Hahahahah :bannana:
 

adam1

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You would use around 50% of 15K in an ISA or high yield bound giving around 4% or use an offshore tax free account.

Otherwise you could legally use the tax free allowance on your spouse's income(if she doesn't work) or £100 interest limit on your childrens saving accounts(there for when they need something special).

There are many other products (financial products) which would give you similar returns.
 

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